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Internal Control Systems
(As of Nov. 12, 2019 )We maintain an internal control system to secure the appropriateness of our work and work of the corporate group consisting of us and our subsidiaries as follows based on the company law and company law enforcement regulations.
1. Basic Policy on Internal Control System and the Status of Maintenance
1. The system to ensure that our directors comply with laws and regulations (The system to ensure that the execution of duties by our directors complies with laws and regulations and the Article of Association.)①We place the highest priority on our directors complying with laws and regulations and the Article of Association and fulfil corporate social responsibility when executing their duties.
②Through compliance-related discussions in the Board of Directors and other internal business meetings, we raise awareness for the compliance of all directors and ensure the execution of duties thoroughly based on it.
③We run the Board of Directors based on the Board of Directors’ official regulations and hold it once a month as a general rule. We promote the mutual understanding among directors as well as supervise the execution of one another’s work, and prevent violations of laws and regulations, as well as the Article of Association.
④We have established the Audit & Supervisory Board, and each Audit & Supervisory Board Member attends meetings including the Board of Directors and other internal business meetings under the audit policy formulated by Audit & Supervisory Board to audit the execution of duties of our directors through auditing the status of work of directors.
⑤We will have no relations whatsoever with antisocial forces that threaten the order of society and sound activities of organizations and, as an organization, take a resolute stance against unreasonable demands from them with specialized external agencies.
2. Basic policy for information security (The system for storing and managing information related to the execution of duties by our directors)①As a member of the global information society, we acknowledge the importance of protecting information assets including personal information from security threats to carry out vibrant business operation while promoting the use of information, and will endeavor to establish a management system that handles information assets accurately and safely, ensuring compliance with laws and regulations and guidelines of international standards.
②We will evaluate and review various regulations and systems related to information security as needed and pursue a continual improvement of them.
③Documents and other information related to the execution of duties of directors will be appropriately stored and maintained by the director responsible for such management according to the regulations for document management, and we inspect the status of utilization and review each regulation as needed. Additionally, we promptly disclose such documents when required by the Audit & Supervisory Board Members.
3. Our risk management system (The system about the regulations on our risk management of the loss and others)①We will prepare appropriately in advance to avoid or minimize various corporate risks that are expected to occur in the future, in accordance with the regulations for risk management. Specifically, the director responsible for compliance identifies risk information that is necessary for the formulation of our management strategies and plans or decision-making process, and provide it for the Board of Directors to make informed decisions on various measures.
②In addition to the above, we will establish a system to avoid or minimize any risks that may have material impact on operations, caused by occurrence of disasters or inappropriate execution of work by our officers.
③The Internal Audit Office, an organization under the direct supervision of the President & CEO, will prepare an audit plan with careful consideration of the items to be audited and the audit method based on the regulations for internal audit and conduct the audit as planned. If the Internal Audit Office finds any violation against laws and regulations and the Article of Association or discovers business actions that may create risk of loss for other reasons, it shall immediately report it to the President & CEO or the director responsible for compliance.
4. The system to secure efficiency of work (The system to ensure that directors perform their duties in an effective manner)①As a general rule, the Board of Directors meets regularly once a month and as needed on an ad hoc basis to confirm directors’ duties are performed efficiently, and promote the mutual understanding among directors and supervise the execution of one another’s work.
②We define roles, responsibilities, duties, etc., of directors based on internal regulations including the Board of Directors’ official regulations, regulations for organization, regulations for official authority, etc., as well as review them as appropriate.
③We promote rationalization and the introduction of IT of the operational system to secure that the execution of directors’ duties is carried out efficiently.
5. The system to secure the laws and ordinances conformity of our employees (The system to ensure that the execution of duties by employees complies with laws and regulations and the Article of Association)①We set forth compliance-related internal regulations and thoroughly ensure that complying with laws and regulations and the Articles of Association when the executive officers and employees of the Group execute their duties and fulfilling its social responsibility as a company are the most critical aspect, and establish a basic business operation attitude through a compliance manual, business trainings, etc.
②We confirm whether the internal control system functions effectively through the Internal Audit Office and watch the status of duties executed by the Group including our subsidiaries.
③The Internal Audit Office reports the results to the audited division and provides appropriate guidance. It also reports to the President & CEO.
6. The system to secure the appropriateness of our work (The system to ensure the appropriateness of work of the corporate group consisting of us and our subsidiaries)
(1) The system to report to us on the matters concerning the execution of the duties of directors of our subsidiaries.①As a system to ensure the appropriateness of work of the Group, we have established the regulations for affiliated company management based on which Business Management Department manages our affiliated companies including our subsidiaries.
If we find any material violations of laws or regulations of our affiliated companies or any other facts concerning compliance, we report it to the Board of Directors without delay.
②We dispatch our executive officers or employees as the directors or the Audit & Supervisory Board Members to all of subsidiaries and build a system where important matters of our subsidiaries are reported to us through such dispatched directors or Audit & Supervisory Board Members.
③We, under the leadership of Business Management Department, collect and analyze materials to accurately grasp the Board of Directors minutes related to our subsidiaries, monthly financial statements, and other subsidiaries’ management contents, and report them to the Board of Directors as needed.
④If any matters subject to timely disclosure occurs, we establish a system for the Board of Directors to be notified by Business Management Department promptly, and review the system when appropriate.
(2)The system about the regulations on our subsidiaries’ risk management of the loss and others①The director responsible for compliance identifies risk information that is necessary for the formulation of the Group’s management strategies and plans or decision-making process, and provide it for the Board of Directors to make informed decisions on various measures.
②If Business Management Department discovers any risk of the loss in our subsidiaries, it shall promptly establish a system to notify the director responsible for compliance or, as necessary, the Board of Directors of the details of such risk as well as the influence on us, and review it as appropriate.
(3) The system to ensure that directors of our subsidiaries perform their duties in an effective manner①Business Management Department aims to improve the performance of the entire group and achieve prosperity of our business by maintaining close relationships with our subsidiaries and providing necessary guidance and support based on the regulations for affiliated company management.
②We have introduced a common group-wide accounting system, and we share the same network and file servers between us and our subsidiaries, and maintain the system where information circulates smoothly between group companies.
(4) The system to ensure that the execution of duties by directors and employees of our subsidiaries complies with laws and regulations and the Article of Association①We apply the compliance-related internal regulations to the executive officers and employees of our subsidiaries and foster an awareness of compliance by making sure it’s thoroughly known.
②We will establish an internal hotline system for reporting compliance issues that is available for every executive officer and employee of the Group including our subsidiaries and will ensure effectiveness of group-wide compliance systems.
③We regularly dispatch the Internal Audit Office to our subsidiaries in order to prevent inappropriate transactions and accounts at our subsidiaries, and we dispatch a management section to our subsidiaries as needed and audit.
7. Employees who assist Audit & Supervisory Board Members (The matter concerning employees to assist the Audit & Supervisory Board Members in case they demand to employ such assistants)If the Audit & Supervisory Board Members demand to employ employees who assist their duties, President & CEO shall immediately elect a well-qualified person, considering the number of such assistants, requirements, period, and the reason.
8. Independence of employees who assist the Audit & Supervisory Board Members (The matter concerning the independence of employees assisting the Audit & Supervisory Board Members from directors, and ensuring the effectiveness of the Audit & Supervisory Board Members’ directions toward the said employees)The employees who assist the Audit & Supervisory Board Members shall support audit engagement of the Audit & Supervisory Board Members under the direction and supervision of them, and we shall obtain the consent of the Audit & Supervisory Board in advance regarding the transfer and assessment of the said employees.
9. Report to Audit & Supervisory Board Members (The system to report to the Audit & Supervisory Board Members and secure that the person who made the report will not be treated unfavorably for the reason that he/she made the report)①In case our directors and employees discover the fact that might give a significant damage to us and our subsidiaries, they promptly report it to the Audit & Supervisory Board Members
②The Standing Audit & Supervisory Board Members attend internal meetings such as the Board of Directors and other business meetings to grasp important decision-making processes and the status of execution of work and reads important documents related to the execution of work such as requests for approval as well as demand explanations to directors and employees as needed. Directors and employees shall promptly report the matters requested by the Audit & Supervisory Board Members.
③The Audit & Supervisory Board Members receive explanations about the details of accounting audit from the accounting auditor and the details of operational audit from the Internal Audit Office. In addition, The Audit & Supervisory Board Members will cooperate and exchange information.
④The director responsible for compliance shall report compliance issues reported or consulted with through the internal hotline system to the Audit & Supervisory Board Members as necessary.
⑤We prohibit to mistreat any person who reports to the Audit & Supervisory Board Members on grounds of such report and will thoroughly inform the fact among us including our subsidiaries.
10. Expenses required by Audit & Supervisory Board Members (Matters concerning the policy on the handling of expenses and debts arising from the execution of duties by the Audit & Supervisory Board Members)When the Audit & Supervisory Board Member made a demand of the payment in advance of the expenses or debts related to the execution of their duties based on the company law Article 388 to us, we immediately process such expenses or debts unless the responsible department proves the expenses or debts related to the said demand are not necessary for the execution of their duties after careful deliberation.
11. The system to ensure the effectiveness of audit by the Audit & Supervisory Board Members (Other system to ensure that the Audit & Supervisory Board Members conduct audits effectively)①Directors and employees make efforts to deepen their understanding of the audits by the Audit & Supervisory Board Members and maintain the auditing environment for audits by the Audit & Supervisory Board Members.
②The President & CEO will exchange opinions regularly with the Audit & Supervisory Board Members and establish a system for the Audit & Supervisory Board Members to communicate efficiently with the Internal Audit Office and be able to execute effective audit engagement.
12. The system to ensure reliable financial reporting①We develop and operate systems for internal control on financial reporting to ensure the reliability of the Group’s financial reporting in accordance with the Financial Instruments and Exchange Act and other applicable laws and regulations.
② We will conduct an independent monitoring by the Internal Audit Office in developing and operating the group-wide internal control system for financial reporting in accordance with a basic policy manual for internal control on financial reporting and promote a proper understanding of IT environment and effective and efficient use of IT based on this understanding.
2．Basic Viewpoints for Excluding Antisocial Forces and Progress of Preparedness for the ExcludingWe think we must exclude antisocial forces in a determined manner. For the demand from fixers of general meetings of shareholders in particular, we must take a resolute attitude, and there must not be things giving profit in the property about the exercise of shareholders’ rights, so we need to remove all relationships that may be said to be uncertain adhesion. If our officers and employees have a relationship with such a group and individual without intention, they shall promptly report the fact to the relevant departments and receive appropriate instructions about a subsequent action.